What's In Store For Markets This Week? More Earnings, Bevy Of Economic Data

Brace yourselves investors for a week chock-full of earnings and economic data that could put more punch into the stock market. Or not.

At the risk of sounding like a broken record, earnings drive market movement, and when some key economic measures are blended into the mix, the combination could have an impact in either direction. Whatever comes out of the earnings parade next week—and it includes the likes of Apple and Facebook —and some key data points for manufacturing, and, the big wheel of them all, Friday’s job numbers, it could swing markets wildly, again, in either direction.

Can the tech rally continue? Friday’s market strength appeared driven in part by the robust profits and forecasts out of Alphabet, Amazon, Microsoft, and Intel, and the foursome tapped all-time highs. That could put a lot of pressure on the earnings expectations out of Apple and Facebook. It might not be surprising to hear the so-called whisper number of Wall Street’s profit projections to climb ahead of their reports. Facebook reports Wednesday; Apple on Thursday.

Economic data, coupled with Friday’s surprising 3% advance in the gross domestic product (GDP), despite weather disruptions, could give a clearer picture of the financial health of the economy. Tuesday kicks off the slew of reports with the Chicago PMI, a snapshot of regional manufacturing indicators from purchasing managers.

That comes ahead of Wednesday’s ISM index, a national measure comprised of more than 300 manufacturers surveyed by the Institute of Supply Management (ISM). When the ISM is on the rise, it generally means that the economy is moving ahead as evaluated by the sector’s sales, production and hiring. Last month, the ISM reading touched a 13-year high at 60.8, despite the hurricanes that disrupted at least some demand and order growth.

Manufacturers last month, however, reported that they were worried about potential supply shortages that might spike prices in coming months. We’ll see how that unfolded in October.

Also Wednesday brings the Federal Open Market Committee’s decision on whether to step up interest rates. The CME’s FedWatch Tool, a reflection of the 30-day Fed fund futures, has indicated that there won’t be a hike with the meter sitting midday Friday at 98.5% probability of stability. It’s an opposite reading for a December move up, at a 96.7% probability. President Trump’s decision on who might lead the Fed beginning in February could sway those readings.

Friday’s job numbers, as usual, are likely to be closely watched as another measure of economic growth. The Fed has expressed much concern about wage growth, so it could be interesting to see if that metric is moving.

Keep an eye on crude oil prices this week too. As of midday Friday, crude prices on the December contracts were higher by more than 2% after Baker Hughes said the rig count for the week grew by one. (See chart.)

Figure 1: CRUDE OIL TESTS NEW LEVELS. Crude oil prices were flirting with resistance at $54 a barrel in midday trading Friday. At that point, prices were better than 28% above its 52-week low touched in June, and within roughly 2.5% of the $55.24 peak tapped in early January. Data source: CME. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.Chart source: The thinkorswim® platform from TD Ameritrade.

The Rich Get Richer: Jeff Bezos, Amazon’s chief executive, blew past Bill Gates Friday to snatch the No. 1 post on the Rich List, at least on paper, according to CNBC’s calculations. Based on his 17.3% stake in Amazon alone, Bezos added $10.5 billion to his treasure chest by midday Friday, the cable network reported, to put his wealth at a staggering $94 billion, well ahead of Gates’ $88.6 billion. He beat Gates once before, for about a day in July before Amazon shares retreated.

All but 47 of the Forbes 400 richest people list are worth less than the paper fortune Bezos accumulated on Friday alone, CNBC reported. Gates made money, too, on Friday with Microsoft’s gains, adding about $600 million to his paper wealth.

The Big Get Bigger: Those share prices on Amazon and Microsoft, combined with Google-owner Alphabet swelled the market capitalizations of those companies to monumental proportions, according to the Financial Times’ reckoning.

The three cumulatively added $144 billion to their market caps, enough to create the equivalent of IBM, whose market cap on Friday stood at $143 billion based on its share price, the FT reported.

Chew on this Grape: Totally off the riches subjects with a low point—wine production is expected to drop to its deepest level in more than 50 years, according to Quartz.com. The culprit looks to be the weather, the International Organization of Vine and Wine (OIV) said, pulling outputs lower by 8% this year. Harsh weather conditions in Italy, France and Spain dashed their wine production by 23%, 19% and 15% respectively.

In the U.S.—and this estimate was made before the fires that engulfed Napa Valley—wine production was projected to fall 1%, while productions in Australia and Argentina were expected to post small gains. In all, OIV’s forecast is for a wine decline of 246.7 million hector-liters. In gallons, that converts to 6,517.

TD Ameritrade® commentary for educational purposes only. Member SIPC.

I am Chief Market Strategist for TD Ameritrade and began my career as a Chicago Board Options Exchange market maker, trading primarily in the S&P 100 and S&P 500 pits. I've also worked for ING Bank, Blue Capital and was Managing Director of Option Trading for Van Der...